Ifci Defers Rights Issue Once Again

IFCI Ltd has been forced to postpone the closing date of its rights issue to February 19, as the Industrial Development Bank of India (IDBI), its principal shareholder, has sought more time to subscribe to its portion of the rights.

IDBI holds 28 per cent stake in IFCI, and has to invest about Rs 100 crore in IFCI via the Rs 352 crore rights issue. The issue is critical for IFCI to maintain minimum capital adequacy levels. This is the second time IFCI has postponed its issue, which opened on December 23. The issue was earlier scheduled to close on January 21, but was rescheduled to February 14, on account of increased demand for split forms, according to an IFCI release earlier.

 

Sources said the second postponement to February 19 was on account of more time being sought by IDBI to subscribe to the issue. Institutional investors are expected to pick up shares on the last day, because in the intervening time they could earn interest on the funds earmarked for the issue. Financial institutions led by Industrial Development Bank of India (IDBI) control nearly 60 per cent of IFCI's equity. Sources however added that the retail response to the issue has been good. The issue, which opened on December 23, is critical for IFCI to meet higher capital adequacy of 9 per cent of risk weighted assets by March, 2000. As on March 31, 1999, the FI's capital adequacy was 8.37 per cent.

The rights issue of equity shares is being made at par in the ratio of 1:1, aggregating Rs 353 crore. The FI said the issue is aimed at boosting tier-1 capital in order to maintain the capital adequacy. The IFCI scrip is currently trading on the Bombay Stock Exchange (BSE) at about Rs 12.